Posts filed under Settlement Expert

New Structured Settlement Annuity Provider, Independent Life

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Today a new Structured Settlement Annuity Provider was announced and is entering the market for underwriting structured settlement annuities. Independent Life is announcing at the Fall NSSTA meeting and beginning the roll out and pre-launch phase ahead of their commencement of business. Per the press release provided to The Settlement Channel:

"After four years of designing and creating a new annuity provider with valuable input from industry leaders, Independent Life is weeks away from entering the structured settlement market. We will make a formal announcement at the NSSTA Fall Meeting in San Antonio where industry experts will have an opportunity to meet and greet the executive team."

The main features of this new company are:

  • Annuities only for the structured settlement market
  • Comprehensive medical underwriting for qualifying cases
  • Competitive upper-tier pricing
  • Ongoing financial support for broker and planner initiatives that promote the growth of the settlement industry for the benefit of all stakeholders
  • An executive team with over 100 years of previous structured settlement experience. 
  • Domiciled in a major state with excellent regulatory reputation for oversight. 

It is expected that over the next month more details on the new company and it's approach will become known. This is the first new life market to enter the structured settlement market since Mutual of Omaha several years ago and represents the first special purpose life market specifically designed to underwrite structured settlement annuities. 

It will be interesting to see what supporting business lines will be included in this venture as it expands, such as structured legal fees, non-qualified immediate annuities or possibly taxable damage annuity options as well. Either way it's good to see a new entrant into a stale market and hopefully this portends further interest in the market by life companies and investors in the coming years. Members of the executive team include long time industry experts Dan Durbin as VP of Marketing and Sales and Patrick Hindert, VP of Business Development. 

Posted on October 14, 2017 and filed under Settlement Expert.

DOL Fiduciary Deadline is coming, what compliance is essential?

The decision earlier this week by Labor Secretary Acosta to not further delay the implementation of the DOL Fiduciary standards on June 9th. This is creating a huge push for compliance guidelines for annuity sales staff, annuity brokers and structured settlement experts. Ok, maybe not the structured settlement experts, they are exempted from just about all suitability and regulatory oversight other annuity purveyors are being held to. That said, these standards will very likely become the defacto expectation regarding duty of care to clients and structured settlement professionals would be wise to immediately adapt their business practices to adhere to them. 

The future. Photo Credit Shutterstock

The future. Photo Credit Shutterstock

This morning ThinkAdvisor published what I think is a very handy check list of dates, guidelines and duties related to how and where this new Fiduciary Standard is being applied. It is as follows:

  1. Applies to IRAs: The rule applies to investment advice concerning IRAs, ERISA plans, and plans covered by Section 4975 of the Tax Code.
  2. Best interest standard starts June 9: Beginning June 9, financial institutions and advisors to covered plans must provide advice in the retirement investor’s “best interest,” which includes a duty of prudence and loyalty.
  3. BICE compliance starts Jan. 1: The extensive compliance requirements of the best interest contract exemption, which would apply to non-level fee products, are not in force until Jan. 1, 2018.
  4. DOL expects changes by Jan. 1: During the transition period (June 9-Jan. 1), Labor will collect additional information from the industry to determine how compliance practices such as the use of mutual fund “clean shares” should reshape the rule.
  5. Proprietary products with commissions permitted: During the transition period, firms can recommend proprietary products with commissions so long as they satisfy the best interest standard.
  6. Need policies and procedures: Labor expects firms to adopt policies and procedures necessary to ensure compliance with the best interest standard.
  7. Robo-advisors can rely on BICE: Robo-advisors may rely on the BICE during the transition period to ensure compliance with the rule.
  8.  Investment advice narrowly defined: Investment advice, for purposes of the rule, does not include plan information or general financial, investment and retirement information.
  9. Can rely on written representations from intermediaries: The rule does not apply if an independent fiduciary provides written representations (including negative consent) that the fiduciary is a bank, insurance company, BD, RIA, or independent fiduciary managing at least $50 million.
  10. DOL will focus on compliance over enforcement: Labor says it will prioritize compliance over enforcement during the transition period so long as firms work diligently and in good faith to comply with the rule. ( Source: ThinkAdvisor.com, published 5/26/17)

In short, we are entering a world where a ton of annuity sales used in IRA roll overs by the Fixed Index Annuity markets is being swept into a standard that requires full disclosure of commissions, conflicts and making sure the recommendation is demonstrably in the best interest of the client. There are a lot of effective compliance tools and courses developed for this transition, I strongly suggest structured settlement professionals and structured settlement planners adopt them on the same schedule and be ahead of the curve instead of behind it. 

Posted on May 26, 2017 and filed under Settlement Expert.

Structured settlement suits discussed in Thinkadvisor article

Earlier this month, one of the leading online publications covering financial planning, investments and life insurance/annuity issues did an exhaustive review of many of the issues facing the structured settlement profession. Written by long time industry expert Senior Editor Warren S. Hirsch, the article looks into several key issues and quotes Settlement Channel commentator and structured settlement industry expert, Mark Wahlstrom, President of Wahlstrom & Associates. 

Photo Credit: Think Stock and ThinkAdvisor

Photo Credit: Think Stock and ThinkAdvisor

The article, Titled "Suit puts structured settlements in spot light" initially focuses on the recent lawsuit filed against casualty giant AIG, alleging among other things that commission's were not disclosed properly and that certain members of the structured settlement profession had worked in unison with AIG to with hold information from plaintiffs about their choices in annuity companies, design of the program and compensation agreements for defense brokers. 

However, the article takes a deeper dive into the issue that is starting to really raise it's head in the structured settlement profession, that being whether the Fiduciary Standard that is being increasingly forced upon other annuity product sales, such as Fixed Index Annuities, will begin to be applied to structured settlement transactions as well. 

Wahlstrom commented that he feels it is inevitable that the structured settlement profession would be brought into the new world of open disclosure of commissions, business relationships and clear conflict of interest avoidance when a structured settlement is being proposed to a client. Regardless of the outcome of the litigation in the AIG class action, the momentum, in his opinion, has swung in the direction of disclosure and a fiduciary standard. This of course would upset the long standing fixed commission of 4% that is paid on all structured settlements, as well as other sales support provided by life and annuity markets to the agents working to place annuity contracts that fund structured settlements. 

Clearly change is coming to structured settlements and no matter how hard the industry pushes back, a new standard is going to be imposed at some point by outside forces looking to bring the sale of structured settlements on an equal footing with the sale of other financial products.  Check out the full article at the link above and share your thoughts with us here.